The
Securities and Exchange Commission (SEC ) has filed 13 charges against
cryptocurrency exchange Binance, two affiliated entities and Founder/CEO
Changpeng Zhao. The US securities watchdog accused Binance and Zhao of
operating illegal trading platforms, offering unregistered crypto asset
securities and commingling customers’ funds.
It also
alleged that Binance operated as an exchange, broker-dealer and clearing agency
without authorization. US derivatives watchdog, the Commodity Futures Trading Commission (CFTC), made similar allegations against Binance and Zhao two months ago.
In a
complaint filed before a district court in Columbia, SEC
alleged that Binance Holdings operated unregistered crypto exchanges
Binance.com and
Binance.US, its US arm. The regulator further accused Binance of tweaking its
controls to enable high-value US customers to trade on Binance.com, contrary to
the exchange’s public claim that US clients were barred from the platform.
In addition, SEC
alleged that affiliated entities BAM Trading and BAM Management together with Binance offered and sold the
crypto exchange’s unregistered token and stablecoin , BNB and BUSD, respectively, on the
Binance.US platform. On top of that, they allegedly provided unregistered profit-generating programmes ‘BNB Vault’ and ‘Simple Earn’
as well as crypto staking products, to US investors.
1/ BREAKING: SEC sues Binance
HEADLINE: The SEC complaint identifies 10 tokens it deems to be unregistered crypto asset securities.
The target list includes some of the biggest names in crypto:$SOL, $ADA, $MATIC, $FIL, $ATOM, $SAND, $MANA, $ALGO, $AXS, and $COTI.
more…
— MetaLawMan (@MetaLawMan) June 5, 2023
Moreover, the SEC
accused Zhao and Binance of secretly controlling the US arm despite claiming
publicly that it is “a separate,
independent trading platform for US investors,” according to a statement.
More Allegations
Finance Magnates reported in February that the SEC was investigating Binance.US and two of its affiliated market makers, Sigma Chain AG and Merit Peak Limited. The platforms are said to have started trading on Binance’s US trading arm following its launch in 2019.
In the latest action, SEC appears to have concluded that investigation as the regulator alleged that Zhao and Binance’s access to Binance.com and Binance.US gave them the opportunity to commingle customer assets or divert them to Sigma Chain, the market maker and trading firm said to be owned and controlled by Zhao. They also allegedly merged ‘billions of dollars of investor assets’ and sent them to
Merit Peak Limited, which is also owned by the Binance Founder. These funds were later subsequently transferred to a third party “apparently in connection with the purchase and sale of crypto assets,” SEC added.
In the complaint, SEC also claimed that BAM Trading and Bam Managment made false representations to investors about surveillance controls put in place to prevent manipulative trading on Binance.US. As a result of this claim, they allegedly raised approximately $200 million from private investors and attracted billions of dollars in trading volumes from both retail and institutional clients.
Contrary to their claims, however, these ‘supposed controls were virtually non-existent’. As a result, Sigma Chain engaged in wash trading that artificially inflated the trading volume of crypto asset securities on Binance.US, SEC alleged.
Still on the allegations, the regulator accused Binance and Zhao of implementing a ‘multi-step plan’ to secretly evade US laws, starting in or around 2018. SEC said this action “put the safety of billions of dollars of US investor capital at risk and at Binance’s and Zhao’s mercy.”
“Through
thirteen charges, we allege that Zhao and Binance entities engaged in an
extensive web of deception, conflicts of interest, lack of disclosure, and
calculated evasion of the law,” said SEC Chair Gary Gensler.
‘Zero Justification’ for Lawsuit, Binance Reacts
Meanwhile, reacting to the lawsuit on Monday, Binance in a blog post said SEC by its latest action abandoned efforts to reach a negotiated settlement to resolve the investigations. It accused the regulator of rushing ‘to claim jurisdictional ground from other regulators’ rather than seeking to serve the interest of investors.
Our response to the SEC’s complaint.https://t.co/mgXxGTKr67
— Binance (@binance) June 5, 2023
Binance said allegations that users’ assets on its US trading platform are at risk are “simply wrong”, adding that “there is zero justification for the [SEC] Staff’s action in light of ample time the Staff had to conduct their investigation.”
“All user assets on Binance and Binance affiliate platforms, including Binance.US, are safe and secure, and we will vigorously defend against any allegations to the contrary,” Binance wrote on its website.
The exchange further noted that it is “prepared to fight [‘the SEC’s latest overreach’] to the full extent of the law.”
Brokeree, Advance Markets partner; illegal brokers; read today’s news nuggets.
The
Securities and Exchange Commission (SEC ) has filed 13 charges against
cryptocurrency exchange Binance, two affiliated entities and Founder/CEO
Changpeng Zhao. The US securities watchdog accused Binance and Zhao of
operating illegal trading platforms, offering unregistered crypto asset
securities and commingling customers’ funds.
It also
alleged that Binance operated as an exchange, broker-dealer and clearing agency
without authorization. US derivatives watchdog, the Commodity Futures Trading Commission (CFTC), made similar allegations against Binance and Zhao two months ago.
In a
complaint filed before a district court in Columbia, SEC
alleged that Binance Holdings operated unregistered crypto exchanges
Binance.com and
Binance.US, its US arm. The regulator further accused Binance of tweaking its
controls to enable high-value US customers to trade on Binance.com, contrary to
the exchange’s public claim that US clients were barred from the platform.
In addition, SEC
alleged that affiliated entities BAM Trading and BAM Management together with Binance offered and sold the
crypto exchange’s unregistered token and stablecoin , BNB and BUSD, respectively, on the
Binance.US platform. On top of that, they allegedly provided unregistered profit-generating programmes ‘BNB Vault’ and ‘Simple Earn’
as well as crypto staking products, to US investors.
1/ BREAKING: SEC sues Binance
HEADLINE: The SEC complaint identifies 10 tokens it deems to be unregistered crypto asset securities.
The target list includes some of the biggest names in crypto:$SOL, $ADA, $MATIC, $FIL, $ATOM, $SAND, $MANA, $ALGO, $AXS, and $COTI.
more…
— MetaLawMan (@MetaLawMan) June 5, 2023
Moreover, the SEC
accused Zhao and Binance of secretly controlling the US arm despite claiming
publicly that it is “a separate,
independent trading platform for US investors,” according to a statement.
More Allegations
Finance Magnates reported in February that the SEC was investigating Binance.US and two of its affiliated market makers, Sigma Chain AG and Merit Peak Limited. The platforms are said to have started trading on Binance’s US trading arm following its launch in 2019.
In the latest action, SEC appears to have concluded that investigation as the regulator alleged that Zhao and Binance’s access to Binance.com and Binance.US gave them the opportunity to commingle customer assets or divert them to Sigma Chain, the market maker and trading firm said to be owned and controlled by Zhao. They also allegedly merged ‘billions of dollars of investor assets’ and sent them to
Merit Peak Limited, which is also owned by the Binance Founder. These funds were later subsequently transferred to a third party “apparently in connection with the purchase and sale of crypto assets,” SEC added.
In the complaint, SEC also claimed that BAM Trading and Bam Managment made false representations to investors about surveillance controls put in place to prevent manipulative trading on Binance.US. As a result of this claim, they allegedly raised approximately $200 million from private investors and attracted billions of dollars in trading volumes from both retail and institutional clients.
Contrary to their claims, however, these ‘supposed controls were virtually non-existent’. As a result, Sigma Chain engaged in wash trading that artificially inflated the trading volume of crypto asset securities on Binance.US, SEC alleged.
Still on the allegations, the regulator accused Binance and Zhao of implementing a ‘multi-step plan’ to secretly evade US laws, starting in or around 2018. SEC said this action “put the safety of billions of dollars of US investor capital at risk and at Binance’s and Zhao’s mercy.”
“Through
thirteen charges, we allege that Zhao and Binance entities engaged in an
extensive web of deception, conflicts of interest, lack of disclosure, and
calculated evasion of the law,” said SEC Chair Gary Gensler.
‘Zero Justification’ for Lawsuit, Binance Reacts
Meanwhile, reacting to the lawsuit on Monday, Binance in a blog post said SEC by its latest action abandoned efforts to reach a negotiated settlement to resolve the investigations. It accused the regulator of rushing ‘to claim jurisdictional ground from other regulators’ rather than seeking to serve the interest of investors.
Our response to the SEC’s complaint.https://t.co/mgXxGTKr67
— Binance (@binance) June 5, 2023
Binance said allegations that users’ assets on its US trading platform are at risk are “simply wrong”, adding that “there is zero justification for the [SEC] Staff’s action in light of ample time the Staff had to conduct their investigation.”
“All user assets on Binance and Binance affiliate platforms, including Binance.US, are safe and secure, and we will vigorously defend against any allegations to the contrary,” Binance wrote on its website.
The exchange further noted that it is “prepared to fight [‘the SEC’s latest overreach’] to the full extent of the law.”
Brokeree, Advance Markets partner; illegal brokers; read today’s news nuggets.
